3 Reasons to Consider Cisco

Brittney Barrett |

Cisco Systems (CSCO) had been a much maligned member of the tech sector until recently. Shares had been declining ad infinitum and analysts were downgrading but the company seems to have rebounded in a big way. While Dell (DELL) and Hewlett-Packard (HPQ) offer weak guidance for the next quarter Cisco Systems, Inc., which designs, manufactures, and sells Internet protocol (IP)-based networking, has surprising optimistic views for the coming quarter.



1) You'd be in good company-Cisco was upgraded by Ehud Gelblum of Morgan Stanley who who increased his rating from Equal Weight to Overweight with a $21 price target. Brian White of Ticonderoga reiterated the buy rating yesterday as well with a price target of $25. Shaw Wu at Sterne Agee mirrored White's price target and also confirmed Cisco as a buy on the basis of consensus overestimating competitive pressures. Stifel Nicolaus, and Wunderlich Securities also upgraded the stock.

2) Guidance Looks Promising- The journey back to healthy has been a long process for Cisco and its by no means complete, but the July 2011 results and October guidance appear to be positive steps. Non-federal switching orders are up 13 percent year over year and the company managed to deliver an incremental revenue upside of $200 million relative to expectations without negatively impacting profitability. Strength in orders across product segments is expected to help the company accelerate to its highest levels in over a year. Additionally the restructuring within the company will aid execution and help revenue.

3) It's Cheap-The last four quarters have taken a major toll on Cisco's share price and company is trading with a much more reasonable P/E ratio than most of its competitors. At around $15 per share, Cisco is extremely depressed and while some analysts might argue the gloomy macroeconomic situation should be taken into account, Cisco is a steal right now, a fact that will likely change should the company out perform other tech companies that have not been seeing the same strength in orders.

 

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
LSCC Lattice Semiconductor Corporation 6.97 0.08 1.16 469,164
CSCO Cisco Systems Inc. 34.13 0.39 1.16 26,989,205
HPQ HP Inc. 16.13 0.18 1.13 17,315,851

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